Zambia’s major vulnerabilities became more apparent, namely its undiversified copper-dependent export base and the rain dependence of its agriculture and power supply. Low copper prices, droughts and falling foreign direct investments have been putting a serious strain on Zambia’s external and fiscal balances. Financial and capital inflows are projected to fall short for covering the 2015 current account deficit. Nevertheless, thanks to its flexible exchange rate regime, the erosion of foreign exchange reserves was contained. Still, the 40% depreciation of the kwacha (over the past year) will raise consumer-related import costs and increase external debt servicing pressure in the short term. Consequently, Zambia’s short-term risk classification was revised, from category 3 to 4.
21 Oct 2019
Zambia: Moving towards another debt crisis
A crisis emerged in 2015 and incited gradual downgrades of Credendo’s political risk classifications
COUNTRIES : Zambia